Federal Court of Australia

Pekar v Holden [2021] FCA 141

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to section 37AO(2)(b) of the Federal Court of Australia Act 1976 (Cth) (hereafter, the “FCA Act”), the applicant be prohibited from instituting in any registry of the Federal Court of Australia any proceedings other than proceedings instituted pursuant to section 104 of the Bankruptcy Act 1966 (Cth).

2.    Pursuant to section 37AO(2)(a) of the FCA Act—or, alternatively, section 31A(1) of the FCA Act or, further alternatively, r 26.01 of the Federal Court Rules 2011 (Cth)—the matter be dismissed.

3.    By no later than 4:00pm on Friday, 5 March 2021, the respondent file and serve written submissions of no more than two pages in length identifying any special costs order or orders that he urges the court to make (as well as the reasons why such an order or orders should be made).

4.    By no later than 4:00pm on Friday, 12 March 2021, the applicant file and serve written submissions of no more than two pages in length in response to the respondent’s submissions on costs (if any such submissions are made).

5.    Subject to receipt of any submissions as above (and to objection otherwise from either party), the court will determine in chambers what order or orders as to costs ought to be made in light of these orders.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

SNADEN J:

1    The respondent is the former trustee of the applicant’s bankrupt estate. By an amended originating application dated 21 September 2020 (and, with leave, filed with the court on 8 January 2021), the applicant moves the court for various species of relief relating to the manner in which the respondent administered his bankrupt estate (prior to his removal as its trustee).

2    Before the court presently is an interlocutory application filed by the respondent on 10 February 2021 for the summary dismissal of the applicant’s suit and for the making of a vexatious proceedings order against him pursuant to s 37AO(2) of the Federal Court of Australia Act 1976 (Cth) (hereafter, the “FCA Act”).

3    The interlocutory application is supported by an affidavit sworn by the respondent on 10 February 2021. By that affidavit, the respondent adopted the content of another affidavit sworn in connection with an earlier proceeding on 25 October 2018. The applicant opposed the interlocutory application, relying upon affidavits that he swore on 31 August, 21 September, 6 October and 8 December 2020.

4    It is necessary to trace precisely the relief that the applicant seeks in this matter. His hand-written amended originating application lists as follows the details of the claim that the applicant hopes to prosecute (errors original):

(1)    relief in a form of aggravated compensation arising from breach of a contract, and criminal negligence by the respondent in a sum determent by court

(2)    refer the respondent for criminal prosecution for “perjury” and embezzlement

(3)    an order that the respondent is personally liably for all remuneration and legal cost of the new trustee of the estate, and the Official Trustee for past, present and future remuneration and legal cost of the new trustees

5    From the submissions made, both orally and in writing, it is apparent that the applicant takes issue with the manner in which the respondent administered his bankrupt estate. This is not the first proceeding in which that administration has assumed prominence. It was the subject of this court’s attention in Pekar v Holden (Trustee) [2019] FCA 442 (Moshinsky J), Pekar v Holden (Trustee) (No 2) [2019] FCA 1212 (Moshinsky J) and Pekar v Holden (Trustee) (No 3) [2019] FCA 1928 (Moshinsky J). That series of authority culminated in orders made on 18 November 2019, by which Moshinsky J declared that the respondent had acted in breach of a contract into which he and the applicant had entered for the purposes of the administration of the applicant’s estate (hereafter, the “Administration Contract”). Amongst other things, his Honour ordered that the respondent repay to the applicant a sum of money that the applicant had paid to him under that contract, and that he cease to act as the trustee of the applicant’s bankrupt estate (those orders are referred to, hereafter, as the “Moshinsky Orders”).

6    By the present proceeding, the applicant hopes to recover sums that he says that he incurred or lost in consequence of the contractual breach that was the subject of the Moshinsky Orders (see the claim articulated above at [4(1)]), to secure criminal convictions (or the commencement of processes designed to secure such convictions) against the respondent relating to money that was (or, so he alleges, was not) paid out of his bankrupt estate (see the claim articulated above at [4(2)]) and to secure an indemnity (either personally or to the benefit of his estate) in respect of the ongoing costs associated with the administration of his estate (see the claim articulated above at [4(3)]). There are, in effect, two parts to his suit: first, he seeks to be placed into the position that he would have been in had the respondent not breached the Administration Contract; second, he seeks to punish the respondent in respect of money that was paid—or, as he says, improperly taken—from his estate.

7    The respondent moves the court for orders under s 37AO(2) of the FCA Act. Section 37AO relevantly provides as follows:

37AO Making vexatious proceedings orders

(1)    This section applies if the Court is satisfied:

(a)    a person has frequently instituted or conducted vexatious proceedings in Australian courts or tribunals…

…

(2)    The Court may make any or all of the following orders:

(a)    an order staying or dismissing all or part of any proceedings in the Court already instituted by the person;

(b)    an order prohibiting the person from instituting proceedings, or proceedings of a particular type, in the Court;

(c)    any other order the Court considers appropriate in relation to the person.

…

(6)    For the purposes of subsection (1), the Court may have regard to:

(a)    proceedings instituted (or attempted to be instituted) or conducted in any Australian court or tribunal; and

(b)    orders made by any Australian court or tribunal; and

(c)    the person’s overall conduct in proceedings conducted in any Australian court or tribunal (including the person’s compliance with orders made by that court or tribunal);

including proceedings instituted (or attempted to be instituted) or conducted, and orders made, before the commencement of this section.

8    Section 37AM(1) of the FCA Act defines “vexatious proceeding”:

(1)    In this Part:

…

vexatious proceeding includes:

  (a)    a proceeding that is an abuse of the process of a court or tribunal; and

   …

(c)    a proceeding instituted or pursued in a court or tribunal without reasonable ground;

   …

9    The respondent submits that the applicant has a history of commencing proceedings in Australian courts and tribunals that lack reasonable prospects of success, or that otherwise amount to abuses of process. That being so, he asks that the court summarily dismiss the present matter and make an order prohibiting the applicant from commencing a new one (unless it falls within a narrow exemption that it is unnecessary here to recite).

10    In the alternative, the respondent seeks an order for summary judgment under r 26.01 of the Federal Court Rules 2011 (Cth) (hereafter, the “FCRs”) on the basis that the present application lacks reasonable prospects of success or is otherwise an abuse of the court’s process.

11    For the reasons that follow, I am satisfied that relief under s 37AO(2) of the FCA Act is appropriate. I am also (and in a related sense) satisfied that the applicant has no reasonable prospect of successfully prosecuting the present proceeding, and that the applicant’s amended originating application constitutes an abuse of the court’s process. I consider it appropriate to (and will) grant an order for summary judgment in favour of the respondent.

The vexatious proceedings order application

12    In order to enliven the court’s jurisdiction to make orders under s 37AO(2) of the FCA Act, the court must (for present purposes) first be satisfied that the applicant has frequently commenced or conducted vexatious proceedings in Australian courts or tribunals. Two things must be demonstrated: first, that the applicant has “frequently” instituted or conducted proceedings; and, second, that those proceedings are worthy of description as vexatious. In considering those factors, the court may take account of orders made by any Australian court or tribunal, as well as the applicant’s overall conduct in proceedings that he has commenced or instituted: FCA Act, s 37AO(6).

13    The respondent’s evidence makes clear enough (and it did not, in any event, seem to be controversial) that the applicant has commenced many, many proceedings over the last 13 years. They appear to hark back to a property dispute that he (and possibly also his wife, Ida Pekar) had with Gough Partners Pty Ltd. That dispute appears to have spawned proceedings in 2008 in the Supreme Court of Victoria and at least eight other suits in the Magistrates’ Court and the Victorian Civil and Administrative Tribunal. Those proceedings (or some of them) have resulted in a number of costs orders being made against the applicant, some on an indemnity basis.

14    The dispute between the applicant and Gough Partners Pty Ltd seems to have spun off a related or consequential dispute between the applicant and his former lawyers, Rickards Legal (and possibly also employees or principals of that firm, Michael Rickards and Karen Katz). Between 2011 and 2017, the applicant commenced 20 proceedings against one or more of those individuals in (collectively) the Supreme Court of Victoria, the Magistrates’ Court of Victoria, the Victorian Civil and Administrative Tribunal and the Federal Circuit Court of Australia. The applicant either withdrew or lost all of them; and, in some cases, lost summarily.

15    Eventually, the applicant’s campaign against Rickards Legal inspired an application by the latter for orders under s 88Q(2) of the Federal Circuit Court of Australia Act 1999 (Cth). On 7 June 2017, Judge Hartnett made orders as requested, the effect of which was (and has since been) to prohibit the applicant from commencing non-family law proceedings in that court. Her Honour published reasons for making those orders: Pekar v Rickards Legal (No 3) [2017] FCCA 1196 (Judge Hartnett). Those reasons contain the following observations (which her Honour made immediately after identifying the various proceedings that the applicant had instituted against Gough Partners and Rickards Legal, which I have outlined above):

14.    Mr Pekar has also issued various proceedings on his own behalf and on behalf of his wife, Mrs Ida Pekar, against the Trustee of his bankrupt estate, Mr Timothy Mark Shuttleworth Holden. The last of these was an unsuccessful appeal to the Federal Court of Australia by Mrs Ida Pekar, against orders sought by the Trustee and made in this Court on 20 January 2017. In those proceedings, the Court declared the transfer of Mr Pekar’s interest in his real property in East St Kilda to his wife was void and made consequential orders for possession and sale.

15.    Since 2011, Mr Pekar has sought to continually litigate the same subject matter, namely the tax invoice paid by him to Rickards Legal and of which he sought a refund. Since 2014, Mr Pekar has sought to challenge the sequestration order made against him and has issued further proceedings on behalf of himself and his wife. He has also sought to make other claims and seek damages against the Respondent, Michael Rickards and Karen Katz.

16.     Despite issuing no less than 21 applications or proceedings in the various jurisdictions, as set out in exhibit “MR-1” (paragraph 12 herein) Mr Pekar has not succeeded in any one of these proceedings. They have been entirely misconceived, an abuse of process and vexatious. As a result of these repeated applications, Mr Pekar has caused considerable costs to be incurred by Rickards Legal. He has used extensively the resources of the courts and VCAT. Those parties against whom he has taken these proceedings, in particular, Mr Rickards and Rickards Legal have borne the significant costs of applying their time in opposing the various applications or on occasion simply as a courtesy to the Court without payment, adding to the other unquantified costs, including emotional, that vexatious proceedings involve and that other parties need protection from. Mr Pekar has, not once, paid any costs orders awarded against him. He appeared to recognise that his pattern of litigation was oppressive, and unusual, in an application he made for a litigation guardian. However, he then provided no relevant evidence to support such an application despite being given an opportunity to do so. It became just another provocative piece of litigation and was not in any way indicative of insight.

17.     By letter dated 21 March 2017 from the solicitors acting on behalf of the Trustee in bankruptcy, Mr Pekar was advised that excluding the various costs orders made against him, and the costs of the solicitors for the Trustee, the amount payable to annul his bankruptcy was approximately $168,477.64. This letter was forwarded as a consequence of Mr Pekar discussing annulling his bankruptcy whilst in a directions hearing on 20 March 2017 before Justice Tracey in the Federal Court of Australia in respect of an application filed by his wife. No response to that correspondence was received.

18.     If an order is not made prohibiting Mr Pekar from bringing further vexatious proceedings in this Court, he will not cease. On its own initiative the Court can make a vexatious proceedings order on the facts before it. On the application of Rickards Legal, which is before the Court, the Court can also make such order. It will be necessary to award a further costs orders against Mr Pekar which in my exercise of that discretion pursuant to s.79(3) of the Act will fix in the sum of $5,000.

16    The applicant has since fixed upon the respondent as the subject of his ongoing litigation obsession. Since 2016, the applicant has commenced four proceedings against the respondent (not including this one), namely:

(1)    an application in the Federal Circuit Court of Australia (lodged prior to the orders of Judge Hartnett), by which the applicant sought an order to compel the respondent to “reinstate” (or, at any event, to pursue) an action that the applicant had previously filed in the Magistrates’ Court against Rickards Legal;

(2)    an application in the Federal Court concerning the Administration Contract (which ultimately led to the making of the Moshinsky Orders);

(3)    an application in the Magistrates’ Court seeking damages in the sum of $25,000.00 arising from the respondent’s decision to discontinue an action brought by the applicant against Rickards Legal;

(4)    an application in the Magistrates’ Court alleging that the respondent was guilty of embezzling $6,000 from the applicant’s estate (by falsely claiming to have paid that sum to Rickards Legal).

17    The first of those applications was dismissed with costs. The second has already been adverted to above. The third and fourth were both unilaterally withdrawn, in each case after the respondent was put to the expense of drawing a defence. The third appears to (but may not) be related to the first. The fourth proceeding bears an obvious resemblance to part of the relief that the applicant seeks in the present matter. All but the second of the four proceedings reveals a fixation upon the applicant’s dispute with his former lawyers, Rickards Legal (which, of course, was the catalyst for Judge Hartnett’s order of 7 June 2017).

18    I have no hesitation accepting that the applicant is someone who has frequently commenced vexatious proceedings in Australian courts and tribunals. I am assisted in forming that view by the orders made by Judge Hartnett. Having regard to the evidence before me (which includes evidence about the various proceedings to which her Honour referred in the passage extracted above), I am compelled to the same views as those that her Honour expressed. It is apparent that, by his various applications (including the present one), the applicant has a tendency (if not a preoccupation) with re-litigating his grievances, despite a wealth of failure developed over an extended period. Re-litigation is a feature often associated with vexatious proceedings: Re Singh, in the application of Mohinder Singh [2020] FCA 213, [15] (Wheelahan J). That the applicant has tasted some success—most obviously in the form of the Moshinsky Orders—is insufficient to displace the overwhelming impression otherwise created by the applicant’s extensive litigation history.

19    I am also drawn to the view that relief under s 37AO(2) of the FCA Act is appropriate in light of the applicant’s conduct in the present matter. As is outlined below, the applicant’s suggestion that the respondent has “embezzled” funds reveals a frankly unhealthy obsession with his dispute with his former lawyers, Rickards Legal. He maintains that suggestion in the face of affidavit evidence that shows unequivocally that the respondent paid the sum in question to Rickards Legal. The applicant’s suggestion that that evidence was falsely sworn is bizarrely conspiratorial and bespeaks a glaring disconnection on his part from the conventions of civilised litigation.

20    For the reasons explored below in the context of summary judgment, the present matter comfortably qualifies as a vexatious proceeding for the purposes of s 37AO(2) of the FCA Act. I consider it appropriate to make orders protecting the respondent—and others, known or otherwise—from the prospect (if not the inevitability) of future vexatious proceedings. The respondent’s proposed order would have the effect of preventing the applicant from commencing in this court any proceeding other than one made under s 104 of the Bankruptcy Act 1966 (Cth). That exemption is appropriate and my orders will give effect to it.

The summary judgment application

21    As has already been recorded, the relief that the applicant seeks is bifurcated: in part, it relates to the manner in which the respondent administered the applicant’s bankrupt estate, before he was removed as its trustee (and, in particular, to the respondent’s breach of the Administration Contract); and, in part, it relates to a sum of money that the respondent paid from the applicant’s estate (before he was removed as its trustee).

22    I will address the second of those two components to the applicant’s claim first. On 15 October 2018, the respondent, then trustee of the applicant’s bankrupt estate, paid the sum of $6,000 to the applicant’s former lawyers, Rickards Legal.

23    That sum was paid in satisfaction of two costs orders that had been made against the applicant (amongst the many that have been over the last 13 years). On 3 March 2017, in a proceeding that the applicant commenced against Rickards Legal (proceeding MLG2171/2016), her Honour Judge Hartnett of the Federal Circuit Court of Australia made orders striking out a subpoena that the applicant had filed and ordering that his bankrupt estate pay Rickard Legal’s costs fixed in the sum of $1,000.00. On 7 June 2017, her Honour made the s 88Q(2) orders referred to above (at [15]), which included a related order requiring that costs fixed in the sum of $5,000.00 be paid to Rickards Legal out of his bankrupt estate.

24    The respondent, as trustee of the estate, complied with those two orders on 15 October 2018, when the $6,000.00 was paid from the applicant’s estate to Rickards Legal. The applicant is of the view that that sum was never paid. He has formed that view in light of the respondent’s refusal to date to provide him with bank records proving, to his satisfaction, that the sum was in fact paid to Rickards Legal. He considers that the respondent’s affidavit testimony verifying the making of the payment (which annexes written confirmation from Rickards Legal of its receipt) was falsely sworn and that the money has, instead, been embezzled. For those reasons, he feels that the respondent should be criminally prosecuted for perjury (in respect of his testimony) and embezzlement (in respect of his retention of the sum).

25    The applicant’s contentions are self-evidently absurd. He has nothing even approximating a proper basis for alleging as he does and the fact that he would air those allegations in the manner than he has speaks poorly of him. But more to the point, the relief that he seeks is light-years from anything that he has even the remotest chance of being granted. In the present context, this court has no jurisdiction to entertain allegations of criminal perjury or embezzlement. If, in the course of investigating a genuine cause of action, the court were alerted to facts that might warrant criminal investigation, it might take steps to have them brought to the attention of the appropriate authorities. But the potential referral is not, in itself, sufficient to ground a genuine cause of action. It is apparent, then, that insofar as he seeks to visit criminal punishment upon the respondent, the applicant’s claims are foredoomed to failure.

26    I turn, then, to address the other pillar upon which the applicant’s amended originating application rests. The applicant hopes to recover from the court the losses that he claims to have sustained on account of the respondent’s breach of the Administration Contract. There are multiple dimensions to what is claimed. First, he seeks compensation for various amounts (the particulars of which, despite the court’s best efforts, seemed to defy precise identification). Second, he seeks to be indemnified (or for his estate to be indemnified) against future costs associated with the administration of his estate. In each case, his submission is simple enough: he claims that, but for the breach of the Administration Contract (to which, it will be recalled, the Moshinsky Orders relate), his bankruptcy would have concluded more quickly and more cheaply. He wants to be put into the position that he says he would have been in had the breach not transpired.

27    The questions of whether or not the breach of the Administration Contract occurred and of what relief should flow in consequence if it did have already been litigated. It was to those questions that the Moshinsky Orders (and the reasons that his Honour published in support of them) were directed.

28    Indeed, by the amended originating application that he prosecuted in the proceeding before Moshinsky J—when, I pause to note, he was ably assisted by pro bono counsel—the applicant sought damages for breach of the Administration Contract. That claim assumed at least two forms. First, the applicant claimed $12,200.35 to cover an amount that he had paid to his daughter, apparently to cover the capital gains tax that she had incurred upon selling shares so that she could provide her father with the funds that the Administration Contract obliged him to pay. Second, he claimed $4,596.26 for legal expenses incurred in relation to the Administration Contract.

29    Those claims did not succeed: Pekar v Holden (Trustee) (No 3) [2019] FCA 1928, [14]-[15] (Moshinsky J).

30    It is not clear whether the “aggravated compensation” that the applicant now hopes to recover comprises the same amounts that he claimed before Moshinsky J (although, as I followed his oral submissions, it seems very much that there is substantial overlap). It doesn’t much matter whether they do or not. A litigant cannot raise a claim or issue in a proceeding if it is so connected with the subject matter of an earlier proceeding that it should be thought unreasonable for it not to have been raised then: Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507, 517-518 [22] (French CJ, Bell, Gageler and Keane JJ). The failure to raise for consideration within the context of the earlier proceeding a claim or issue connected with its subject matter creates an estoppel—known most commonly as “Anshun estoppel” in recognition of the judgment of the High Court in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, to which the origins of the estoppel can be traced (at least in Australia). The effect of that estoppel is to preclude agitation of the claim or issue in subsequent litigation.

31    Here, as has been noted, the applicant has already (before Moshinsky J) prosecuted—successfully prosecuted, at that—a case for breach of the Administration Contract. Even assuming (contrary to what might, in truth, be the case) that there are heads of damage that the applicant did not pursue in that earlier litigation, it is plain that he could and should have. To permit their agitation now would be to risk the prospect of conflicting judgments, in that the question as to whether or not the respondent acted in breach of the Administration Contract would inevitably be revisited. That possibility alone illustrates the importance of the Anshun principle.

32    The amounts that the applicant hopes to recover now are either amounts that he has already sought to recover or amounts of which he ought to have sought recovery in the proceeding before Moshinsky J. Either way, they are amounts that he is estopped from claiming now, and in respect of which he cannot, in this action, succeed.

33    FCR r 26.01 relevantly provides as follows:

26.01    Summary judgment

(1)    A party may apply to the Court for an order that judgment be given against another party because:

(a)    the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or

(b)    the proceeding is frivolous or vexatious; or

(c)    no reasonable cause of action is disclosed; or

(d)    the proceeding is an abuse of the process of the Court; or

(e)    the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding.

(2)    The application must be accompanied by an affidavit stating:

   (a)    the grounds of the application; and

   (b)    the facts and circumstances relied on to support those grounds.

(3)    The application and the accompanying affidavit must be served on the party against whom the order is sought at least 14 days before the hearing of the application.

The rule is reflected in a statutory power of summary dismissal: FCA Act, s 31A. It is also reflected, in the case of vexatious litigants, by the power conferred by s 37AO(2)(a) of the FCA Act.

34    Here, the respondent’s application for summary judgment was not served within the timeframe contemplated by FCR r 26.01(3). No issue was raised in light of that and, even had I reached a different conclusion about relief under s 37AO(2) of the FCA Act, I would have been content to rule upon the application regardless. There is no apparent prejudice in my doing so and the issue at hand is straightforward.

35    I am satisfied that the applicant has no reasonable prospect of successfully prosecuting any of the claims that are detailed in his amended originating application. His action amounts to an abuse of process: Walton v Gardiner (1993) 177 CLR 378, 393 (Mason CJ, Deane and Dawson JJ); see also UBS AG v Tyne (2018) 265 CLR 77, 83 [1] (Kiefel CJ, Bell and Keane JJ). It is, in either case, appropriate to exercise the court’s power to grant summary judgment.

Costs

36    By his interlocutory application, the respondent seeks an order requiring that his costs be paid out of the applicant’s estate on an indemnity basis. At the hearing, neither party made any submission on the question of costs. In light of the manner in which I propose to dispose of the interlocutory application, it is plainly appropriate that there should be an order that the respondent receive his costs and that they be paid out of the applicant’s estate. I should prefer to reserve the question as to the basis upon which those costs should be awarded for consideration once I have had the benefit of submissions. If the respondent presses his application for costs to be paid on an indemnity basis, he should do so by means of short, written submissions (no more than two pages), to be sent to my associate (and copied to the applicant) within seven days. In the event that such an application is pressed, I will afford the applicant an opportunity to provide equally short submissions within an equivalent timeframe, after which I will (unless requested otherwise) decide the issue on the papers. In the event that no such application is pressed, I will order simply that the respondent’s costs be paid out of the applicant’s estate.

EPILOGUE

37    At the hearing of his interlocutory application, the respondent was invited to identify the form of orders that he would have the court make. He undertook promptly to provide a written minute of the orders that he sought. The applicant was told that he would have an opportunity to comment on the form of those proposed orders if he wished to do so, save that any such submissions would need to be constrained to their form rather than their appropriateness.

38    As promised, the respondent subsequently furnished the court with a written minute of the orders that he sought. The applicant then, on 23 February 2021, sent facsimile correspondence to the court, by which, despite the court’s request, he made the following submissions (amongst others; errors original):

1.    Lawyers acting for respondent in the proceeding by letter dated 19.02.2021 informed me of their intention to start court proceeding seeking possession of my property.

2.    Without going in to any details related to possession of property, the matter of which is not before HIS HONOR, the reason that the matter has been brought to HIS HONOR’S attention, is the fact, that if HIS HONOR will make an order sought by the respondent, I will not be able to defend the action by the respondent in a court of law.

3.    That is what the respondent is trying to achieve, and based on the above, I request, that HIS HONOR refrain from making such an order which will live me defenceless against any action by the respondent.

39    I should not wish to say much about an application of which I am not seized (and which may not yet, or ever, exist). It suffices that I would note, for the applicant’s benefit, that the orders that will be made herein will not have the effect that he identified in his unsolicited submission of 23 February 2021.

Associate:

Dated:    26 February 2021